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What amount will be reported as estimated warranty liability

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Question - Mariano Corporation sells 7,000 units of inventory during the first year of operations for $700 each. Mariano provides a one-year warranty on parts. It is estimated that 4% of the units will be defective and that repair costs are estimated to be $70 per unit. In the year of sale, warranty contracts are honored on 80 units for a total cost of $5,600. What amount will be reported as Estimated Warranty Liability at the end of the year?

A. $19,600

B. $5,600

C. $15,680

D. $14,000

Reference no: EM132193320

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